OMPI » Topics » Note 6: Income taxes

This excerpt taken from the OMPI 10-Q filed Aug 11, 2008.

Note 5: Income taxes

        The Company adopted the provisions of FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, on January 1, 2007. As of June 30, 2008 and December 31, 2007, unrecognized tax benefits, all of which affect the effective tax rate if recognized, were $167 and $161 respectively. Management does not anticipate that there will be a material change in the balance of unrecognized tax benefits within the next 12 months.

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Obagi Medical Products, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in thousands, except share and per share amounts)

Note 5: Income taxes (Continued)

        The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2008 and December 31, 2007, accrued interest related to uncertain tax positions was $44 and $40, respectively.

        The tax years 2003-2007 remain open to examination by the major taxing jurisdictions to which the Company is subject.

        Income taxes are determined using an annual effective tax rate, which generally differs from the United States federal statutory rate, primarily because of state taxes. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities, along with net operating loss and credit carryforwards.

        The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax benefits credited to stockholders' equity relate to tax benefits associated with amounts that are deductible for income tax purposes but do not impact net income. These benefits are principally generated from employee exercises of non-qualified stock options.

This excerpt taken from the OMPI 10-Q filed May 8, 2008.

Note 5: Income taxes

        The Company adopted the provisions of FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, on January 1, 2007. As of March 31, 2008 and December 31, 2007, unrecognized tax benefits, all of which affect the effective tax rate if recognized, were $163 and $161 respectively. Management does not anticipate that there will be a material change in the balance of unrecognized tax benefits within the next 12 months.

        The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of March 31, 2008 and December 31, 2007, accrued interest related to uncertain tax positions was $42 and $40, respectively.

        The tax years 2003-2007 remain open to examination by the major taxing jurisdictions to which the Company is subject.

        Income taxes are determined using an annual effective tax rate, which generally differs from the United States federal statutory rate, primarily because of state taxes. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities, along with net operating loss and credit carryforwards.

        The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax benefits credited to stockholders' equity relate to tax benefits associated with amounts that are deductible for income tax purposes but do not impact net income. These benefits are principally generated from employee exercises of non-qualified stock options.

These excerpts taken from the OMPI 10-K filed Mar 4, 2008.

Income taxes

        Income taxes are determined using an annual effective tax rate, which generally differs from the United States federal statutory rate, primarily because of state taxes and research and development tax credits. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities, along with net operating loss and credit carryforwards.

        The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax benefits credited to stockholders' equity (deficit) relate to tax benefits associated with amounts that are deductible for income purposes but do not impact net income. These benefits are principally generated from employee exercises of non-qualified stock options.

Income taxes



        Income taxes are determined using an annual effective tax rate, which generally differs from the United States federal statutory rate, primarily because of state
taxes and research and development tax credits. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities, along with net operating loss and credit carryforwards.



        The
effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax benefits credited to stockholders' equity
(deficit) relate to tax benefits associated with amounts that are deductible for income purposes but do not impact net income. These benefits are principally generated from employee exercises of
non-qualified stock options.



This excerpt taken from the OMPI 10-Q filed Nov 14, 2007.

Note 6: Income taxes

        The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized an approximate $90 increase in the liability for unrecognized income tax benefits which was accounted for as an increase to the January 1, 2007 accumulated deficit balance.

        At the adoption date of January 1, 2007 and as of September 30, 2007, unrecognized tax benefits, all of which affect the effective tax rate if recognized, were $111 and $141 respectively. Management does not anticipate that there will be a material change in the balance of unrecognized tax benefits within the next 12 months.

        The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of the adoption date of January 1, 2007 and as of September 30, 2007, accrued interest related to uncertain tax positions was $29 and $32, respectively.

        The tax years 2003-2006 remain open to examination by the major taxing jurisdictions to which the Company is subject.

        Income taxes are determined using an annual effective tax rate, which generally differs from the United States federal statutory rate, primarily because of state taxes and research and development tax credits. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities, along with net operating loss and credit carryforwards.

        The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax benefits credited to stockholders' equity relate to tax benefits

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associated with amounts that are deductible for income tax purposes but do not impact net income. These benefits are principally generated from employee exercises of non-qualified stock options.

This excerpt taken from the OMPI 10-Q filed Aug 7, 2007.
Income taxes.   Income tax expense increased $2.8 million to $4.5 million for six months ended June 30, 2007, as compared to $1.7 million for the six months ended June 30, 2006. Our effective tax rate was approximately 40% for the six months ended June 30, 2007 and 2006.

This excerpt taken from the OMPI 10-Q filed May 8, 2007.
Income taxes.   Income tax expense increased $0.9 million to $1.9 million for three months ended March 31, 2007, as compared to $1.0 million for the three months ended March 31, 2006. Our effective tax rate declined 1% to 40% for the three months ended March 31, 2007, compared to 41% for the three months ended March 31, 2006, primarily due to the estimated impact of the 2007 research and development credit.

This excerpt taken from the OMPI 10-K filed Mar 15, 2007.

Income taxes

Income taxes are determined using an annual effective tax rate, which generally differs from the United States federal statutory rate, primarily because of state taxes and research and development tax credits. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities, along with net operating loss and credit carryforwards.

The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax benefits credited to stockholders’ equity (deficit) relate to tax benefits associated with amounts that are deductible for income purposes but do not impact net income. These benefits are principally generated from employee exercises of non-qualified stock options.

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